TY - JOUR
AU - Neumark,David
AU - Wascher,William
TI - Does a Higher Minimum Wage Enhance the Effectiveness of The Earned Income Tax Credit?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 12915
PY - 2007
Y2 - February 2007
DO - 10.3386/w12915
UR - http://www.nber.org/papers/w12915
L1 - http://www.nber.org/papers/w12915.pdf
N1 - Author contact info:
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
William Wascher
Federal Reserve Board
Stop 66
Washington, DC 20551
Tel: 202/452-2812
Fax: 202/452-5296
E-Mail: william.l.wascher@frb.gov
AB - We study the effects of minimum wages and the EITC in the post-welfare reform era. For the minimum wage, the evidence points to disemployment effects that are concentrated among young minority men. For young women, there is little evidence that minimum wages reduce employment, with the exception of high school dropouts. In contrast, evidence strongly suggests that the EITC boosts employment of young women (although not teenagers). We also explore how minimum wages and the EITC interact, and the evidence reveals policy effects that vary substantially across different groups. For example, higher minimum wages appear to reduce earnings of minority men, and more so when the EITC is high. In contrast, our results indicate that the EITC boosts employment and earnings for minority women, and coupling the EITC with a higher minimum wage appears to enhance this positive effect. Thus, whether or not the policy combination of a high EITC and a high minimum wage is viewed as favorable or unfavorable depends in part on whose incomes policymakers are trying to increase.
ER -